Legislators debate how much aid to give to schools

Extra money could come as one-time payment or an ongoing rate increase

Jan. 10, 2013

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PIERRE — South Dakota schools will be getting more money from the Legislature next year. The only question is what form that money takes.

Gov. Dennis Daugaard has proposed a 3 percent increase in per-student funding to schools, an increase of almost $135 a student, or $15.3 million. His budget also left about $25 million unspent, which lawmakers can — and probably will — direct in part to schools.

But where lawmakers disagree is whether extra money for schools should come in the form of one-time bonuses or ongoing increases.

Schools prefer ongoing increases because it lets them budget that money into the future for long-term commitments such as new hires or programs. Daugaard and some lawmakers prefer one-time money precisely because it’s not a long-term commitment — it doesn’t bind the Legislature to spending money that might not be there next year.

Some legislators say giving the schools more ongoing money than the 3 percent increase Daugaard proposed is off the table.

“I believe that there is a skepticism within the body to find the ongoing funds over and above ... 3 percent,” said Sen. Mark Johnston, R-Sioux Falls.

Johnston said he and others aren’t confident the economic recovery will continue, bringing with it improved future state revenues.

“One good year doesn’t cause a sea change,” Johnston said. “We’re doing really well in South Dakota, a lot better than a lot of places, but there’s just too much uncertainty.”

Democrats in the Legislature support giving schools more ongoing funding.

“I think we need to try to do more ... just to try to make up for the cuts that were made a couple of years ago,” said Sen. Billie Sutton, D-Burke. “It seems like a couple of areas are catching back up, but education hasn’t yet.”

Near the end of the legislative session, lawmakers will get updated projections for next year’s state revenue. If those projections look good, Democrats could find Republican allies for giving schools extra ongoing money.

Sen. Larry Rhoden, R-Union Center, wants to give schools a boost in ongoing funding if the money’s available. Not only would that money help the schools, he said, but it would help local property taxpayers.

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That’s because under state law, increases to school funding up to 3 percent are matched by local property taxes. But increases above 3 percent are paid solely by the state — meaning increases above 3 percent increase the state’s share of education funding.

The state pays 53.45 percent of school funding. That’s down from around 56 percent a few years ago, when the state let local taxpayers take over more of the cost as part of a compromise, engineered by Rhoden, to limit the effect of cuts.

“Now that we’re turning the corner, I think it’s important that we reduce that trend and get closer to the burden we had two years go,” said Rhoden, the Senate majority whip.

Other lawmakers are skeptical this could occur.

“There’s still some misperception that exists out there that there’s going to be this great big windfall in revenues,” said Sen. Corey Brown, R-Gettysburg, the Senate’s president pro tem.

If there is a big revenue windfall, Brown said, lawmakers might consider more ongoing school funding. “You’re typically not going to see such huge changes,” he said.

And schools wouldn’t be the only interest lining up for any unexpected windfall. Medical providers and other key areas also will push for increases in funding, he said.

It would cost the state an estimated $5 million or $6 million to give an extra 1 percentage point increase to schools — from a 3 percent boost to 4 percent. As an ongoing expense, that’s $5 million in expenses that would then apply to all subsequent budgets and would form a higher base for future percentage increases in funding.

At a pre-session forum in Sioux Falls, Sioux Falls School District superintendent Pam Homan said she would prefer ongoing increases but sees a one-time bonus as better than nothing.

Rep. Dan Dryden, R-Rapid City, and the former business manager for the Rapid City Area School District, said many schools would be willing to accept a smaller increase if it were ongoing.

“From a school perspective, they would appreciate a smaller amount of ongoing and forgo a bigger amount in one-time money,” Dryden said.

Dryden, a member of the House Appropriations Committee, which oversees spending, said there would be “interest” in giving schools a small ongoing increase above 3 percent. But he said it might well fall short of a majority.

“Whether there’s enough to pass anything, I don’t know, but I think there will be some interest in trying to put it in ongoing — a small amount,” he said.